Let’s make this clear: The investment-only advisor who still pursues prospects based solely on their current portfolio size is going the way of the dinosaur. This threatened species is being be replaced by the financial planning-centric professionals who will be treated like celebrities by their clients and by supporting vendors (e.g., friendly trustees).
How can you avoid becoming a commodity? Here are three ideas to get you started right away.
And once you’ve learned how to use these ideas to stand out from the crowd, here are seven strategies you can use to turbo-charge your business development efforts.
1. Be smarter about prospecting
Long-term successful entrepreneurs know about planting seeds in many different fields.
But what about building out short-term goals for adding to your firm's AUM?
One proven strategy is to develop segmented prospect lists and marketing efforts.
Here’s an example.
If you’re like many advisors, your main client segment is retirees with at least $1 million in investable assets.
But maybe you should broaden your perspective to take on smaller-sized clients with huge future AUM growth potential. Because behind a prospect’s portfolio assets you see today are potentially a lot more coming down the road.
So now you define a new client segment: Those who have smaller taxable or IRA accounts ($500,000 to $1 million) but have large asset locations elsewhere.
For example, if an investor in their late 50s asks you to manage their $500,000 Roth IRA, find out whether they may have five times that amount saved in a 401(k) account they’ll want to eventually roll over to a managed IRA account when they retire.
Or an entrepreneur with a company with enterprise value of $6 million EBITDA.
Or low-AUM prospects who may have windfalls waiting in the wings: Business owners who stand to make a fortune when they sell their firm at some point. Middle-income millennials at startup companies who may become instant millionaires when they cash in their stock options.
Or even newly minted physicians and lawyers who haven’t saved a lot now but will accelerate it when they become partners.
You want to be there before they enter the ranks of high-net-worth investors, not after, when you’re competing against other advisors for their business.
2. Improve your lead generation efforts
It's pretty simple. Write down the types of clients you want to capture in your local area. Are there big companies with retirees? Do retirees move to your region? Are new businesses being created? Are there various entrepreneurial peer-to-peer learning groups in your area?
Go to where the future wealthy families will be in the future (e.g. groups entrepreneurs need to join). Educate them on beginning mistakes. Sell nothing. Just educate and share knowledge in quick and easy 30-minute snippets.
Once you’ve identified the clients you want, work on optimizing your digital marketing efforts to create an effective lead-generation process,
This isn’t something you’ll be able to do on your own. You’ll need to hire a qualified digital marketing agency that has proven experience helping advisory firms maximize conversion rate optimization, or CRO.
3. Lead with financial planning
Everybody thinks they know about investments. Kind of like everyone thinks they know enough to criticize an NFL coach on Monday morning.
That’s why you need to be more than the old-school investment-only advisor who writes long essays about the economic lemons and potential lemonade solutions plaguing our financial system today.
Today’s clients aren’t just looking for portfolio management. They want to work with a financial planner who can provide strategies and solutions to help them manage cashflows, shrink their debts and reduce their taxes, while simultaneously saving for retirement and their children’s college education.
And, as they get older, they’ll also need help figuring out how to pass their wealth on to their children and favorite causes in the most tax-efficient manner.
They’ll want to avoid making beginner mistakes when creating their testamentary trusts. And they'll want to know how to pick the right kind of trustee to execute their estate plan when they pass on.
When you successfully use financial planning as a hook to land these will-be-wealthy clients, they’ll eventually bring you the assets they have now—and the windfalls they’ll receive later.
Accepting them also opens an important gateway to your best source of leads—client referrals.
For multi-advisor practices, this approach becomes even more important.
4. Avoid old-school advisor marketing
If I accepted every unsolicited retire-planning-lunch-and-learn offer I receive in the mail from financial advisors I’ve never heard of, I’d probably need stomach surgery by now.
Why advisors still spend money on these and other ineffective direct mail and digital marketing campaigns is beyond me. Especially when the most time-tested way to get new prospects costs them nothing.
Cold-calling, blast emails and direct mail not only aren’t effective, they’re likely to close any doors you might have opened through more targeted and effective marketing approaches. Again, that’s why it’s critical to work with a marketing agency who knows how to motivate investors to respond to an offer.
5. Be smarter about client referrals
Of course, you want to do this strategically. The biggest mistake advisors often make is asking a client, “Do you have any friends, family members or coworkers you could send my way?”
It’s too open-ended for clients to answer. Instead, you want to help them identify the people who will be most impressed by the services and solutions you offer.
Start with the clients who’ve experienced first-hand your ability to solve complex financial challenges.
The executive you’ve helped to tax-efficiently liquidate their concentration in company stock to build a more diversified, income-generating retirement portfolio. The older couple you’ve worked with to develop an estate planning strategy to pass their wealth on to their heirs. The younger, middle-income family for whom you’ve developed a comprehensive plan to help them save confidently for their short-and-long-term financial goals.
If these clients are satisfied with the solutions and exceptional service you’ve provided, ask them if they’ll make a “warm introduction” on your behalf with people they know facing similar challenges.
I can’t emphasize enough the importance of the “warm” part.
Too often a client will simply hand over the names, email addresses and phone numbers of a few friends and “give the advisor permission” to reach out to these people directly, saying that “(Client’s name) recommended I contact you.”
I can tell you from experience this never works. We’ve all become trained to delete cold emails and hang up on telemarketing calls.
Instead, when a client or someone else in my network suggests a few referrals they’re willing to send my way (e.g., other advisors eventually needing our friendly trustee services), I ask them to send them an email introducing me and provide them with specific language for the email suggesting why this prospect may benefit from connecting with me.
6. Use centers of influence judiciously
When meeting with your centers of influence, exchanging ideas generates a lasting, win-win relationship. Eventually, business referrals may occur organically. They will provide leads that are tailored to your desired client segments.
Here are a few questions to ask an estate attorney or CPA:
- In the last 12 months what frustrating stories have you experienced with corporate trustees?
- What changes have you made to leverage technology to serve your clients better?
- How are you finding the next generation of employees to add enterprise value to your firm?
- What changes to tax or other laws have frustrated your clients the most this year?
- When reading industry periodicals which topics are you looking for?
- How do you juggle crunch time when resolving critical issues for your top clients?
- What are your peers worried about concerning the future of your industry?
Like advisors, attorneys and CPAs have formal and informal peer groups. Informal peer groups are the strongest. If you are working well with a current COI and ask them for a referral, be specific and provide context for the warm introduction email.
And try to avoid quid-pro-quo expectations. You may find yourself sending more referrals to a CPA or attorney than you receive in return. But then at some point you’ll receive that one huge AUM-heavy referral that could take your practice to an entirely new level.
7. Add this key COI to your business development efforts
I often find that most advisors’ COI networks don’t include a corporate trustee that can champion the advisor relationship.
Maybe it’s because advisors assume that when their clients need to establish a trust that their attorney will find a trustee for them. Or maybe it’s because advisors think corporate trustees will poach their assets.
In reality, many estate attorneys simply don’t have relationships with independent corporate trustees located in “trust-friendly” states that let advisors manage the assets in their clients’ trusts.
Advisors who make the effort to establish relationships with independent corporate trustees are in a better position to collaborate with their clients’ accountants and estate attorneys to come up with appropriate directed-trust solutions where the advisor will still get to manage their clients’ assets when they pass on.
Another benefit? Managing trust assets gives you the ability to establish closer relationships with the beneficiaries of the trust, giving you the inside track toward adding your clients’ children and grandchildren to your book of business.
Start adopting the competitive mindset before it’s too late
Advisors who don’t want to become obsolete and want to grow their practices need to think differently about the way they market themselves and their firms. Positioning yourself as a provider of financial solutions and leveraging your best clients as your principal prospect sources will give you a leg up over old-school investment-only advisors who don’t recognize the importance of changing with the times.
Christopher Holtby is co-founder and Trust Educator at Wealth Advisors Trust Company, an independent trust company headquartered in South Dakota that is included in the 2022 America's Most Advisor-Friendly Trust Companies. To learn more about Wealth Advisors Trust Company's capabilities, please CLICK HERE.
